Here is an excerpt from John Kaiser
"...Gold and metal prices are both in powerful uptrends, with gold recently passing the $500 milestone. The market was caught by surprise at how easily gold hit $540, but profit-taking has since then pushed gold back to the $500 level. The debate now revolves around whether $500 will prove to be a ceiling that inhibits a continued uptrend for gold, or a floor for a new consensus target of $1,000 gold. While people have noticed that gold is at a new recent high, a sense of urgency with regard to gold has not yet developed, partly because unlike in the late seventies when gold underwent a ten-fold gain into new price territory, today's gold has merely doubled from its 1999 low and still remains short of its 1980 peak 25 years ago. The real milestone that must be achieved is the realization that $500 is the new floor for gold, and when that happens the ascent to $1,000 will prove surprisingly quick and easy. It is key to keep in mind that only 4 billion ounces of gold exist in above-ground form, whose $2 trillion total value pales against the $1.2 trillion in oil burned up each year. It is the unwillingness of gold owners to sell, and the growing acceptance of gold as a long term asset class that hedges against the uncertainties of the civilization scale changes being wrought by the rise of Asia, which will drive higher real gold prices that stick. The gold uptrend is not about the traditional gold bug anxiety over collapsing fiat currencies, which is a wash for the gold mining industry, but more about a Darwinian struggle for survival as the fat industrialized west grapples with 2 billion hungry Asians striving for the west's standard of living and adopting the economic and technological mindset that built the industrialized west.
The influence of Asia is very much apparent in the commodity markets, with virtually all metals and energy commodities in price uptrends as demand continues to outstrip supply. Ironically, the all time high copper price seems to have been created by a Chinese trader who on behalf of the State Reserves Bureau sold short more than 130,000 tonnes of copper below $1.50 per lb. Markets such as copper have been in backwardation since early 2004 when the cyclical bears began to hum their song about how the commodity supply cycle always lags the business cycle with an inevitably disastrous boom-bust outcome. The structural bulls have argued that this time is at least temporarily different because the world is undergoing a permanent structural shift in demand as China and India enter the modern global economy. The cyclical bears have countered that the economic boom in China and India is pretty much at the mercy of western consumption which has been facilitated by abornomally low interest rates, a real estate bubble, and a peculiar willingness by Asia to reinvest their trade surplus dollars in American treasury notes. That party, goes this line of thinking, is coming to an end, which will spell terrible woes for the Asian economies that send commodity prices into a tailspin. The structural bulls counter that the Asian juggernaut has developed so much momentum that their leadership has no choice but to foster a consumer society that enables Asia to wean itself from dependency on western consumption. They argue that China has already achieved critical mass, and point at a future where the direction of the global economy will no longer be as heavily influenced by the US economy. The breakout in commodity prices is a warning that 2006 is shaping up as a major showdown between the cyclical bears and the structural bulls..."
News 
Market Data 
Discover 
